Good morning recyclers of the region,
Its appears that leaves are not the only things falling this autumn. Ferrous prices are joining our leafy friends in the decent as prices continue to trickle down, as they have for the past calendar year.
If you have been reading my commentary, you will know the main culprits of pricing pressure on steel has been the lack of export due to the tariffs that the US administration has placed on incoming steel and more recently the chipping away of prices for new steel due to a poor orders from service centres and other mill customers.
This month, we have the added challenge of capacity being taken out of the market due to mill outages for ‘routine’ maintenance and the recent GM strike. The GM strike should not be understated, as I have been told that GM alone consumes around 35,000 NT of steel a month in the US and Canada. Then you add their tiered suppliers to the mix – that is a lot of material not being consumed with no where else to go!
As you can read in the articles attached, with 13 mills out of the month and the remaining consumers taking reduced orders this month – some significantly reducing their buys from the prior month. The net effect of the demand being removed from the market is that Detroit mills have entered the market taking orders down $35/GT on grades (heavy melt and plate) and $40/GT on prime materials, we are anticipating declines along similar lines.
What this means is that we are going to experience yet again, another severe price drop for our ferrous scrap metal that we are generating. And based on what my instinct tells me, we likely will not see a meaningful rebound in pricing for some time, as inventories are building up across many yards due to reduced mill orders and a challenging environment for recyclers to market their scrap into.
We expect the October market to come out early to mid next week and we will have more clarity on our markets and scrap metal credits for you at that point.
This is not the first challenging cycle in our over 100 year history and we have experienced and we will continue to ensure that our customers get the best value for their scrap that they are generating.
If you have any questions about your recycling program or market questions in general, please feel free to reach out.